The IL&FS contagion continues to spread aggressively, the latest casualty being the Indian armed forces. Several lakh of salaried workers across public sector undertakings and Postal Life Insurance have already been infected with these bonds. Now, it is learnt, the virus has also spread to the armed forces.
IANS learns that a few sections of the armed forces, primarily the army, have invested their corpus of funds in the once AAA-rated IL&FS bonds to secure their future. The Indian Army has three specific funds in which fellow countrymen can contribute – Army Welfare Fund Battle Casualties (set up in 2016 after the Siachen avalanche disaster and the Pathankot/Uri incidents), Army Central Welfare Fund and the Paraplegic Rehabilitation Centre Pune – towards the members/families of the armed forces who have made the supreme sacrifice for the nation. It is still not known whether these funds have invested in the virus-laden bonds.
There is also the flagship National Defence Fund which was set up to take charge of voluntary donations in cash and kind received for the promotion of the national defence effort. The Fund is used for the welfare of members of the Armed Forces and paramilitary forces and their dependents. At the end of March 31, 2018, the total expenditure was Rs 64.75 crore, whole receipts were Rs 83.85 crore and the total cumulative balance was Rs 1115.18 crore.
There is also a department for ex-servicemen’s welfare which gives benefits to the widows of fatal battle casualties. This pertains to death due to accident in the course of duties, death due to terror violence, death during enemy action in war or border skirmishes or against militants/terrorists and death during enemy action in war or warlike engagements specifically noted — the benefits are given in the following way, which is Rs 10 lakh each in the first two cases and Rs 15 and Rs 20 lakh respectively in the latter two cases. Various other benefits are provided to war widows.
These funds, formed by servicemen with the objective of supporting fatalities and army widows, have invested in these bonds considering the ratings and safety assurances portrayed by the rating agencies.
The corpus has a membership of army men and provides support to millions of army men and their widows in case of eventualities.
With the IL&FS default, all these investments are now nearly junk, jeopardising the interest and future of millions of armed forces.
The army, it is learnt, will be making a representation to the defence ministry in this regard to seek directions and resolution.
Since it’s a non-government effort by military men to create a safety corpus, the government may not be able to resolve the same immediately, said government sources.
However, add government sources, this is likely to touch a sensitive nerve in an election year, especially against the backdrop of the Pulwama attack and the retaliatory act by India.
Politically, this is a land mine. Armed forces and the increasing patriotism will certainly take an aggressive campaign agenda in the coming weeks.